Contrary to previous three day period (T+3), the launch of proposed T+2 settlement cycle will help the central securities depositories to meet the European Union CSD regulation.
Post implementation, securities transactions conducted on all trading venues such as stock exchanges, multi-lateral trading facilities and organized trading facilities that settle in ESES will be settled on a T+2 basis. However, OTC transactions have been exempted from the T+2 regime.
Euroclear said that early starting will also allow clients of the three CSDs to prepare for T+2 settlement much before the three CSDs migrate their settlement activity to the European Central Bank’s Target2-Securities (T2S) platform in March 2016.
Euroclear ESES CEO Valérie Urbain said that a move towards a shorter settlement cycle will increase operational efficiency, as well as drive down counterparty risks.
"After extensive consultation with clients and stakeholders in our markets, we took the decision to commit to T+2 settlement now, and to make the transition earlier than required," Urbain added.
Euroclear Finland, Sweden and UK & Ireland are also mulling a switch to T+2, for which recommendations and timelines are anticipated in 2014.
